<p>"The notion that education pays and that better education pays better is taken for granted by almost everyone. For college professors like me, this is a very convenient idea, providing a high and growing demand for our services.</p>
<p>Unfortunately, the facts seem to disagree. A recent study by economists Stacy Dale and Alan Krueger showed that going to more selective colleges and universities makes little difference to future income once one accounts for the underlying ability of the student. Their work confirms other studies that find no financial benefit to attending top-tier schools. "</p>
<p>VERY INTERESTING CONCLUSIONS ABOUT TOTAL EXPECTED LIFETIME EARNINGS FOR STUDENTS WHO PAY BIG $$ FOR COLLEGE OR OUT TAKE OUT LOANS TO PAY FOR GRAD SCHOOL.</p>
<p>This is a follow-up to an earlier study by Dale and Krueger. This updated study comes to the same conclusion as the earlier one. Someone else posted another story about this research a week or two ago, but it got little traction. Responses to D and K’s argument seem to fall into two camps: (1) ignore it because it conflicts with many of our assumptions; (2) attack Dale and Krueger for considering higher ed expenses as investments which should yield a monetary return.</p>
<p>Dale and Krueger used to get a lot of discussion on CC, maybe two or three years ago. I guess that crowd is gone now.</p>
<p>What if there are no loans to repay? Would be nice to see the actual calculations these folks ran to come up with their conclusions. Not sure if it will change a LOT of minds, but it is more food for thought and might give pause to those who want their kids to go to the most expensive place money can buy.</p>
<p>There are indeed opportunity costs and some professions have people working a lot longer in them than others (e.g. those in physically demanding jobs often can’t work as many years as those who mostly do deskwork; attorneys tend to practice longer than docs at research facilities who have to hustle for grants). Some fields lend themselves to more flexibility so that people can practice part-time when raising a family & as they want more free time in their golden years.</p>
<p>I’d be interested in others’ perspectives in this. Also, what if the education was NOT so pricey (e.g. public and/or subsidized with merit or other aid).</p>
<p>Not sending my kids to Harvard (but to other elite schools). The idea of judging it by economic payout isn’t even on my radar screen. This is about a unique experience.</p>
<p>I don’t really know anything about banking hiring but this is what I hear. Forgive me if it’s not fully accurate. </p>
<p>If you want to be an investment banker, you have no shot if you go to a public school unless it’s called Berkeley, Michigan, or UVA. And even from those schools, it is much harder to get into than if you go to UPenn, MIT, Harvard, Princeton, UChicago, Stanford, etc. </p>
<p>Of 'course not everybody wants to be an investment banker (I thought I was the only one but I’m told it’s actually not that rare), but for those who do there are obvious advantages to passing up the inexpensive but perfectly fine school.</p>
<p>Somehow, it’s tough to measure “meaningfulness” of jobs. I have staff that qualified for med school and nursing but became respiratory therapists because they prefer the hours and lifestyle. I know a man who has a degree in both dentistry and law and is a bureaucrat at our DOH, helping interpret HIPPA laws. I have never earned nearly as much as I could but am happy with contributing to our society in various roles. How much should meaningfulness weigh compared to salary? Some of the happiest people I know do not make 6-figure salaries.</p>
<p>Aren’t most grad schools free? But you might have been referring to professional schools as well…</p>
<p>I don’t find the result of the study too surprising, but since you mentioned Harvard, I just want to add that as of now, the school provides full financial aid for both domestic and international students from families with incomes less than $60,000, such that these students have no expected parental contribution. Furthermore, families with incomes up to $180,000 have an average expected parent contribution of 10 percent or less of their income. This makes the private institution even more affordable than state public for the vast majority of American families.</p>
<p>Should higher education be primarily an investment that must yield a monetary return? There is much to be gained from being in a classes with high achieving peers and faculty, and there’re much opportunity to expand interests outside of the classroom that an elite university can provide with its multitude of resources.</p>
<p>Ah, the irony. An acquaintance of mine chastised us for not persuading our oldest to go to an Ivy, like his oldest, because that was the one true road to fame and fortune. </p>
<p>His kid has become an architecture major. </p>
<p>I wouldn’t laugh if he hadn’t made it clear that high earnings capacity was an important factor for him.</p>
<p>I don’t think Dale and Krueger are making that argument. They are pointing out that if parents assume that investment return parallels ‘rank’ and ‘reputation’ they may be mistaken.</p>
<p>Some of us can afford to approach formal higher education as a larger, total experience. Others are making significant present and future sacrifices on the assumption that the pain is worth it because the kids are assured of (or at least have a greater chance of) an easier future as a direct result.</p>
<p>I do think people should recognize that even if D and K have done the study well, and their conclusions are correct in general, it doesn’t mean that every kid studying every subject will do just as well at every school.</p>
<p>Totally agree with Pizzagirl. Our family offers a neverending saga of educated but downwardly headed from an economic standpoint. By choice. My H almost broke the mold as a physician, but did manage to find the least paying path there (inner city clinic pediatrician) before chucking it all for the bottom of the teaching ladder. I ditched a PhD program long ago, and am now on the verge of quitting my lowpaying full time work for part-time adjuncting. My D has an elite LAC education (Phi betta Kappa yadda yadda) but works a lowpaying but fulfilling job in a field she’s passionate about. S ditched three and a half years of Ivy education when it stopped working for him, works in the same area as his sis.</p>
<p>We’re all still eating, and have roofs over our collective heads. And we all appreciate our educations and use them every day. Just never really appreciated the ‘education equals career’ connection.</p>
<p>Depends on the field. Medical and law schools generally not. But in some academic fields, fellowships, research assistantships, and teaching assistantships are commonly offered so that graduate students need not go into debt (or additional debt).</p>
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<p>Given the cost of such (unless one gets a lot of need or merit money), the financial aspects do tend to come into decisions that people make about attending university, what to major in, etc…</p>
<p>But also note that many in government and charitable organizations believe that the answer to your question is yes, from their point of view. I.e. people who get bachelor’s degrees tend to be less likely to be poor; from the government’s point of view, more likely to be improving the economy and contributing taxes, and less likely to be costing welfare money (or worse, police, court, and prison costs).</p>
<p>The truth of the matter is that there are many schools just as expensive as Harvard. But they don’t provide as much Financial Aid. And they don’t open as many doors. </p>
<p>The points though are probably good food for thought for all pricey private schools.</p>
<p>Actually, a lot of master’s students pay some or all of the costs themselves, depending on the field. If you’re funded for STEM for a PhD program, you should not have to pay and may actually net earning something (even a lot in some cases). Some of these “prestige” jobs are “gilded handcuffs,” that people do because they like some aspect–the status, $$$ or something about the job but may actually HATE the job itself. It was literally making my brother ill to continue in his job where he was making great money, so he reluctantly chucked it to become a loan officer and later counsel for a bank. He seems much happier and healthier now.</p>
<p>There are a significant # of public & private Us where many of the top students get great merit awards and are paying well below sticker prices to pursue their interests. The merit aid S got made the private he went to cheaper than many OOS publics.</p>
<p>The point is well taken that there is not a direct connection between expensive schooling and well-paying careers, but to many of us, our kids Us was never really about them getting particularly well-paying careers (a job in the field would be nice, though).</p>
<p>I don’t think these economists are committed to the view that higher education should be viewed purely as an economic investment, to be evaluated by its rate of financial return. But I think they’re absolutely right that a lot of people—parents as well as students—DO view it at least in part that way, and blithely assume that the higher up the prestige scale you go, the higher the rate of return. C’mon people, you and I see those arguments made on CC all the time. And I also think they’re right that many of the people making those arguments have never really done the calculations to see if their assumptions are correct. Given that, their iconoclastic view is refreshing.</p>
<p>That said, I find the particular example offered here unpersuasive. First, as others have pointed out, not everyone pays full sticker price for their undergrad education. Second, no one borrows 100% of the cost of their undergrad and graduate education; consequently, even for the median Ohio doctor, debt service on student loans will be a lot less than is stated here. (On the flip side, though, it has occurred to me that if instead of shelling out $200K+ for my D’s elite LAC education, I just gave her all that money in the form of an investment account earning a real interest rate of 5%, her annual wages might be less but she’d be more secure financially for a good long time). Finally, not everyone who doesn’t go to college becomes a plumber. That’s a job that’s probably near the top of the non-college-educated occupations in earning potential. I don’t understand the trade well enough to say what all the entry barriers are, but surely they’re formidable. So “Joe” in the example can’t simply say, “I think I’ll take a pass on college and become a plumber,” and presto! he’s a plumber. He may never get into the apprenticeship program and end up flipping burgers or driving a cab or laying asphalt on a seasonal road construction crew. If he does get the apprenticeship, it will require years at very low wages before he starts to earn real money, and in some places may require him to invest in community college classes, the cost of which is not accounted for in the example. Rates of serious injury are significantly higher for plumbers than for the workforce as a whole, and certainly higher than for most of the white-collar occupations filled by college graduates; so Joe’s projected earnings need to be discounted by the probability of a debilitating injury. Main point, though, is that the earnings of an experienced, fully employed plumber are hardly representative of the earnings of non-college graduates, and that undercuts the credibility of the story these guys are trying to tell.</p>
<p>Also, by taking the doctor’s salary and averaging it out over his adult life, they fail to take into account the difference in expendable income during the prime earning years. If the higher prestige worker takes some of his extra cash each month, which is going to be more than the extra the teacher has, and invests it rather than buying a yacht, won’t he likely end up wealthier? Come on, do the blue collar people you know really live better than the doctors you know? Something is missing in this equation, even if it’s nothing more than the fact that one’s intelligence will be better developed having gone to college, which in turn leds to better lifestyle and financial decisions.</p>
<p>Few people are choosing between being a doctor and being a plumber. Plenty are deciding whether to go to University of Whatever State and Pricey Private U for their premed. undergraduate schooling. It seems to me, the latter is the type of situation Dale and Krueger’s study may be addressing.</p>
<p>While Harvard may not be the best example because of its financial aid policies, plenty of people still pay full price. Some of them are truly wealthy (as in, inherited family wealth, not current income), but many who are not are choosing to spend the big dollars on undergraduate education rather than put $100K or so into something else–investments, medical school, whatever.</p>
<p>A group with a lot of representation on CC are those who are choosing between full-price U and merit $ school. Generally those debates end up revolving around the issue of intellectual experience, which D and K don’t, and can’t, address if they stick to the economist tool bag. But for those who want to think about the monetary investment aspect of higher ed., this study is useful.</p>
<p>D1 graduated from Harvard last spring. She’s not motivated by the financial fast-track, but she’s eager for life-enhancing new experiences - travel, friendships, special opportunities, etc. She came out of four years of the Harvard classroom with a degree in Government. That’s fine. But she came out of four years of immersion in the Harvard extracurricular scene as a fascinating young person - insightful, articulate, engaging, funny, self-motivated, and networking-savvy. She’s doing a one year internship which pays $1,000 a month plus a place to live. It’s not likely to lead to a high-paying permanent position. But she’s got a couple nearby places where she can work at night, primarily for the fun of it, and bring in $500-1,000 in tips, largely on the basis of her personal skills. She uses that to moonlight in the NYC indie music scene, where she eventually hopes to perform. She’s got all kinds of music contacts, and her contacts in NYC-area food service venues enabled her to pull together a Hospitality Industry tour of NYC for her alma mater. She’s 22 and having the time of her life.</p>
<p>I know wealthy professionals my age who run the gamut from satisfied with their lives to miserable. The credentials they needed for their careers are available at most universities and work just fine. My D’s college payoff wasn’t available only at Harvard, but in her case, Harvard provided the type of setting that stretched in in ways that she longed to grow. The payoff is not financial at this point, though she would say that it is enriching her life in more ways than she can count.</p>